Many companies like to report unclaimed property as soon as it shows up as abandoned on their books. I understand the desire to get the records reported to the state and out of your hair, but you may wish to slow down and let those records age.
Why is this important? One reason is that you are not allowing enough time to find your customers and reunite them with their property. If you can contact that customer, it’s likely your business relationship will continue and you’ll benefit from their patronage for some time to come. Another reason is that many states don’t want you to send records early without their express, written permission.
How do you know when the property has aged long enough to be reported to the state? I’ll give you a quick lesson on calculating dormancy. All states have a list in their handbook or somewhere on their website listing each type of property code they will accept and the dormancy value that is assigned to each code. Each state has a cutoff date, also known as the Period End Date that is used to calculate the dormancy.
For our example, we’ll look at MS05, Customer Overpayments, for the state of Tennessee. The dormancy value assigned to this code is 3 years. The cutoff date for this spring’s Tennessee report is 6/30/2019. You simply take 6/30/2019 and subtract 3 years. This means you will send the state all MS05 property with a last transaction date of 6/30/2016 or earlier. It’s very simple when you look at it this way.
If you’d rather not have to calculate the dormancy manually, you’re in luck. Unclaimed property software can come to the rescue. For example, Sovos unclaimed property software already contains tables with dormancy values for each property code in every state. When you run a report, the system looks at the cutoff date for the state you are processing and automatically calculates the dormancy based on the last activity date values you have entered, so you only report the records that qualify. If you have permission to report records early, it’s still no problem. You can use a status value of Force on Report and the system will ignore the dormancy calculation.
Whether you rely on a manual process, build your own reporting system, or use a software provider, it’s always in your best interest to let your records age appropriately. Of course, it also helps to perform your due diligence and try to contact the rightful owners in the meantime.
Learn more about Sovos unclaimed property compliance solutions.